DBM: Gov’t underspending down to 3% at P85.2 billion in 2017

Aika Rey
DBM: Gov’t underspending down to 3% at P85.2 billion in 2017
If the debt burden is excluded, underspending in 2017 only amounts to P39.9 billion or less than 2% of the full-year fiscal program of P2.91 trillion

MANILA, Philippines – The government underspent by P85.2 billion ($1.58 billion) or 3% of the 2017 national budget, lower than 2016’s record of 3.6%, the Department of Budget and Management (DBM) announced on Wednesday, February 28.

Budget Secretary Benjamin Diokno said that government spending for 2017 reached P2.824 trillion ($54.18 billion), higher by 11% or P274.4 billion ($5.26 billion) in 2016. 

The DBM attributed the improvement to the administration’s “Build, Build, Build” infrastructure program and higher subsidies to government corporations for irrigation projects and housing programs.

“In 2016, underspending was at 3.6% but that was with the revised fiscal program….Remember, 2016 was an election year – marked by heavy spending by the administration and 2016 was the final year of the outgoing administration,” Diokno told reporters on Wednesday.

According to the DBM, underspending resulted largely due to savings from interest payments which amounted to P24.3 billion ($466.28 million) and balances from the miscellaneous personnel benefits fund and the pension gratuity fund.

These balances were due to low releases of performance-based bonuses to government employees, minimal claims from pension and retirement benefits, and the undisbursed personnel expenditures on the part of the Commission of Elections due to the postponement of the 2017 Sangguniang Kabataan and barangay elections.

The lower underspending rate is also a result of shortening the validity of the budget to one year which pushed agencies to fast-track implementation of projects and programs, Diokno said.

The budget chief also noted that if the debt burden is excluded, underspending in 2017 only amounted to P39.9 billion ($765.62 million) or less than 2% of the full-year fiscal program of P2.91 trillion ($55.84 billion).

The P3.35-trillion 2017 national budget is the first fiscal program crafted under the Duterte administration, with budget calls starting during the term of former President Benigno Aquino III. (READ: What’s in the proposed 2017 national budget?)

During the Aquino administration, the government posted an underspending problem with rates going as high as 13.3% in 2014 and 12.8% in 2015. (READ: Gov’t underspending is ‘epic incompetence’ – Diokno)

Better fiscal performance

Diokno also said on Wednesday that he expected further improved spending in 2019, as the government shifts to annual cash-based budgeting which will disburse payments to goods and services rendered within the same fiscal year.

Currently, the government implements multi-year obligation-based budgeting which disburses payments as obligations or commitments which may not necessarily be delivered within the same year.

“[Annual cash-based budgeting] limits incurring obligations and disbursing payments for goods delivered and services rendered, inspected, and accepted within the fiscal year,” Diokno said.

Budget implementation will be done in one year with an extended payment period of up to 3 months after that fiscal year, Diokno added.

The new budgeting system is one of the features of the budget reform bill which hurdled the House committee on Appropriations on Tuesday, February 27. (READ: Gov’t officials urge passage of budget reform bill)

The proposed measure seeks to improve how budgets are crafted, spent, and tracked. It also seeks to streamline the financial transactions across government agencies under an integrated information system.

“We want to institutionalize reforms. The reforms we are instituting now can’t be reversed. That’s why we want to pass that bill,” Diokno said. – Rappler.com

*$1 = P52.11

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Aika Rey

Aika Rey is a business reporter for Rappler. She covered the Senate of the Philippines before fully diving into numbers and companies. Got tips? Find her on Twitter at @reyaika or shoot her an email at aika.rey@rappler.com.